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Condo Market Report April-May 2019

16 April 2019

Remax-Condos-Plus

SALES COMMENTARY

Sales for March at 7200 units matched those of March of last year. What does that mean? If you had expected a bounce back from last year’s sales numbers, then you would be disappointed. Year-to-date, 2019 is dead even with 2018. Last year, we only reached the 8,000 monthly sales number by June. For 2019, we need to achieve a month of 9,000 sales for this to be considered a market in line with the previous five years.

While sales have been disappointing, prices have not declined. Aside from the York Region (Richmond Hill), prices are 2%-5% higher than for March of 2018 across all property types. The primary reason is that listings have also declined. Much has been made of the fact that many Realtors cancel and relist a property to give it a ‘fresh look’ and hence we may be overstating ‘new’ listings. So, this makes our argument even stronger when we look at just ‘new’ listings. The importance of ‘new’ listings is that you need to compare sales in a month to ‘new’ listings generated in the same month (flow to flow) as opposed to comparing sales (flow) to ‘active’ listings which is a stock concept. On TREB, the March 2019 ratio of sales-to-new listings was 51%. In March of 2018 it was 47%. A balanced market is in the 40-60% range. The 416 area is currently 56% versus 47% in 905.

In terms of the condo market, we actually saw sales decline in March by 9% from March of 2018. Most of this drop was in the 416 area. Within 416, the weakest area was downtown where sales were 21% lower. In Humber Bay Shores the drop was only 7%. Against these sales figures, you have to examine the sales-to-new listings ratio. Downtown it was 60%. It was 78% in Humber Bay for March. In March of 2018, the corresponding numbers were 74% and 88%. These numbers indicate that we are still in a ‘sellers’ market, even though sales are lower than last year. Prices are thus 5% higher on average from a year ago which supports this view.

SALES TO 'NEW' LISTINGS RATIO

This chart plots the sales-to-new listings ratio (SNLR) for the current year and previous year. A balanced market is between 40% and 60%. When looking at Downtown Condos, we can see that we are still in a ‘sellers’ market.

PURE SPIRIT CONDOS:DISTILLERY DISTRICT

Located at the corner of Parliament and Mill Street, this 10-year-old condo marks the entrance to the Distillery District. This dual structure building has a tower and lower podium ending in a ‘V’. Besides access to the shops and restaurants of the cobble-stoned streets of the Distillery District, the building itself has many amenities and a 93 walk score.

We first looked at a small one-bedroom without parking or locker on a high floor in the tower. It does have a balcony and city views. It sold in late 2018 for $537,000. It previously sold in late 2015 for $328,000. Over this three-year span, the increase was 63% or 18% compounded annually. At 519 sf, this is an entry level condo and sold for $1,030 psf.

The second unit we looked at was also in the tower on a high floor. It is a two-bedroom, two-bath unit, with parking, locker, and balcony. It is a corner suite with unobstructed views. This condo sold in the Fall of 2018 for $716,000 and previously in 2013 for $398,000. Over this five-year period, the increase was just over 12% per year. At 758 sf, the price last year was $945 psf. There are currently 3 condos for sale out of 378 units in the building. In summary, the resale market today is at $1,000 psf for prime buildings.

RENTAL COMMENTARY

To the end of March, condo rentals were 8% higher than for the same quarter of last year. Our primary focus is always on the downtown market which represents 56% of the Toronto market for rentals. The downtown market experienced a 14% increase in rentals over the same period last year.

Studio or bachelor units downtown were leasing for $1825 per month – up $25 from February. The largest rental segment is the one-bedroom without parking which were renting for $2100. The second biggest segment is the one plus den, again without parking, and the average rent here was $2225. The two-bedroom, again without parking, was renting for $2800 on average. Adding a parking spot will increase the rent by $200 per month!

The three-bedroom market is extremely small, and if you can find one, be prepared to pay $4200. An option is the two-bedroom with den which is smaller but can be rented for $3400 on average.

CMHC reports that 35% of all condo units in Toronto are being rented. While approximately 7,000 new units enter the rental market each year, vacancy rates remain unchanged from 2018. Currently, the condo vacancy rate in Toronto is .7%.

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